ARE  OUR  RAILROADS 


TREATED  FAIRLY? 

UNLVEftSIT 

*  oo 


JSC 


An  Address  by 

% 

FREDERIC  A.  DELANO 


JSC 


Before 

THE  ECONOMIC  CLUB  OF  NEW  YORK 


April  29,  1913 


“ARE  OUR  RAILROADS  TREATED  FAIRLY?” 


By  Frederic  A.  Delano. 

“Are  Our  Railroads  Treated  Fairly?”  Although  that  question 
is  the  subject  of  our  debate,  it  is  not  my  intention  to  attempt  to  an¬ 
swer  it.  I  shall  make  an  effort  to  tell  briefly  the  history  of  the  situa¬ 
tion  and  describe  the  present  conditions,  and  let  you  decide  for  your¬ 
selves,  from  the  facts. 

The  first  steam  railroads  were  built  scarcely  more  than  80  years 
ago.  As  you  all  know,  in  no  country  of  the  world  has  their  growth 
been  so  rapid  as  here,  and  nowhere  else  has  so  much  been  accom¬ 
plished  by  private  enterprise.  During  the  first  60  of  these  80  years 
every  possible  encouragement  was  given  to  the  promoter  and  investor 
to  build  into  new  territory  or  to  duplicate  existing  lines.  The  evils 
which  flowed  from  excessive  railroad  building  and  over-speculation  in 
railroad  construction  cannot  be  laid  wholly  at  the  door  of  the  railroad 
men  of  the  time,  but  must  be  shared  equally  by  the  general  public, 
for  everything  was  done  to  encourage  the  lust  of  conquest.  Full  and 
complete  dependence  was  placed  upon  the  competitive  theory.  And 
yet,  through  all  this  period,  in  spite  of  all  the  glowing  prospectuses 
of  the  promoters  of  the  day,  it  was  recognized  that  investments  in 
Railway  securities  were  hazardous.*  Forty  and  fifty  years  ago  the  in¬ 
terest  rates  on  railway  bonds  were  7  to  10  per  cent,  and  this,  with 
^discounts  and  stock  bonuses  given,  brought  the  net  interest  burden 
Q  upon  the  railroads  to  fully  10  per  cent.  Usually  neither  the  states 
nor  the  communities  gave  any  guarantees  whatever.  On  the  other 
Tiand,  there  was  no  intimation  that  profits  would  be  limited  to  what 
the  courts  now  call  “a  fair  rate  of  interest  on  the  investment.”  The 

*An  important  consideration  is  that  investment  in  a  railway  is  different 
^Ifrom  investment  in  any  other  enterprise  in  that  it  can  never  be  abandoned, 
however  unprofitable  it  may  turn  out  to  be.  Thus,  a  new  line  or  an  extension 
of  an  existing  line  may  prove  to  have  been  unwisely  conceived,  and  unneces¬ 
sary;  it  may  be  excessively  costly  to  operate;  but,  notwithstanding  this, 
federal  and  State  authorities  declare  that  it  cannot  be  abandoned. 

—  The  railway  I  am  connected  with  has  a  short  branch  to  a  town  on  the 
main  line  of  two  railways  and  served  by  four  in  all,  yet  the  authorities  forbade 
our  abandoning  this  unprofitable  branch  and  compelled  us  to  rebuild  a  bridge 
on  this  line,  the  cost  of  which  will  not  be  repaid  in  several  years  of  operation. 


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reasonable  expectation  of  the  investor  was  that,  while  some  of  these 
investments  might  prove  disastrous,  they  might  prove  very  profitable. 

Towards  the  end  of  this  first  60-year  period,  the  evils  of  the 
competitive  system  began  to  make  themselves  felt,  and  public  opin¬ 
ion  demanded  remedial  legislation.  Briefly  stated,  those  evils  were 
excessive  discrimination  between  communities  and  even  between  indi¬ 
viduals.  The  first  important  legislative  effort  at  a  remedy  was  the 
passage  of  the  Interstate  Commerce  law,  25  years  ago.  Since  that 
time,  especially  within  the  last  20-year  period,  there  has  been  a  con¬ 
stantly  growing  public  sentiment  of  hostility  towards  the  railways. 
I  shall  make  no  attempt  to  justify  the  acts  of  the  railways  during 
these  first  decades  of  development,  although  I  think  much  might  be 
said  on  that  score.  Any  student  of  the  question  can  readily  see  that 
the  conditions  were  the  natural  result  of  the  method.  Communities 
everywhere  did  all  they  could  to  make  the  railroads  compete  with 
each  other,  in  order  to  secure  by  this  very  competition  dis¬ 
crimination  in  their  own  favor;  large  industries  in  their  own  sphere 
did  the  same  thing,  and  the  reaction  finally  came  when  there  were  not 
enough  favors  left  to  go  around.  Communities  and  individuals  who 
received  less  than  they  thought  they  ought  to,  began  to  raise  objec¬ 
tions  to  the  system  which  they  had  themselves  helped  to  create. 

Briefly,  then,  the  history  of  the  railroads  has  been: 

First.  Sixty  years  of  rapid  extension  and  competitive  building, 
leading  to  intense  strife  for  traffic,  encouraged  in  every  possible  way 
by  the  communities. 

Second.  Growing  dissatisfaction  with  the  railroads  during  the 
latter  part  of  this  period. 

Third.  An  entire  change  of  policy  in  the  last  20-year  period, 
compelling  a  readjustment  by  the  railways. 

This  latter  phase  is  the  one  in  which  we  are  particularly  inter¬ 
ested  to-day.  It  is  not  necessary  to  tell  a  body  of  business  men  or 
economists  that  readjustment  is  the  most  difficult  problem  which 
business  has  to  encounter.  We  have  a  good  example  of  that  in  the 
tariff  question.  Many  of  us  favor  a  decided  reduction  of  the  tariff, 
but  even  the  most  ardent  believer  in  a  tariff  for  revenue  rather  than 
a  tariff  for  protection  can  see  the  immense  difficulties  of  readjustment 
when  it  is  remembered  that  wages  and  all  the  methods  of  manufacture 
have  been  predicated  on  one  set  of  conditions  and  must  be  rudely  or 
quickly  readjusted  to  another.  In  this  period  of  readjustment  the 
railroads  have  also  been  confronted  by  the  swelling  tide  of  dissatis¬ 
faction  which  has  shown  itself  chiefly  in  an  unfriendly,  if  not  hostile, 
public  opinion.  It  may  be  said  that  in  the  60  years  of  our  growth 
we  “sowed  the  wind”  and  are  now  “reaping  the  whirlwind,”  but  in 


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any  fair  review  of  the  facts  I  think  it  will  have  to  be  acknowledged 
that  the  whole  community  shared  in  bringing  about  this  result. 

I  do  not  wish  to  appear  before  you  as  a  special  pleader.  Railroad 
men  do  not  claim,  and  I  do  not  claim,  that  we  are  better  than  other 
men — that  we  are  more  free  from  blame  or  responsibility.  But,  con¬ 
sidering  the  problem  broadly  and  fairly,  it  has  always  seemed  to  me 
that  railroad  men  would  average  up  with  any  equal  number  of  bank¬ 
ers,  manufacturers  or  merchants.  Any  other  conclusion  must  be 
based  on  the  theory  that  the  vocation  does  not  attract  the  best  type 
of  our  civilization,  or  that  there  is  something  in  the  calling  which 
tends  to  a  faulty  development,  neither  of  which  conclusions  seems  to 
me  to  be  well  founded.  On  the  contrary,  it  seems  to  me  that  the  great 
variety  in  a  railroad  man’s  work  makes  a  distinct  appeal  to  men,  and 
by  the  same  to.ken  the  work  should  broaden  character  rather  than 
narrow  it.  And  this  is  true,  even  though  we  see  a  tendency  in  rail¬ 
way  organization,  as  in  all  other  pursuits,  towards  the  development  of 
specialists  rather  than  “all-around”  men. 

The  greatest  difficulty  the  railways  have  to-day  arises  from  the 
fact  that  the  policy  of  the  country  as  a  whole  is  inconsistent  and  un¬ 
settled,  for,  while  the  federal  and  state  governments  have  emphat¬ 
ically  adopted  the  theory  of  the  regulation  of  rates,  public  opinion 
and  the  law  still  retain  the  theory  of  the  competitive  system.  In  other 
words,  the  community  as  a  whole  seems  unwilling  to  trust  the  regu¬ 
lation  theory  or  else  wants  to  get  all  the  advantage  of  both  theories. 
When  the  railroads,  some  three  or  four  years  ago,  appealed  to  the  In¬ 
terstate  Commerce  Commission  for  an  advance  in  rates,  they  were 
attacked  by  commercial  organizations  in  most  of  the  large  cities,  on 
the  ground  that  they  were  conspiring  together  to  advance  rates  in 
violation  of  the  Sherman  Anti-Trust  Law.  The  Commission  denied 
the  advance  in  toto  on  the  ground  that  some  of  the  more  prosperous 
railroads  were  already  making  a  good  return  on  their  investments.  A 
feature  of  the  argument  during  the  hearing  was  that  of  the  counsel 
for  one  of  the  protesting  communities,  maintaining  that  an  advance 
in  rates  was  unnecessary  because  enormous  economies  were  possible 
by  the  adoption  of  efficiency  methods;  and  while  railroad  men  of  the 
country  were  fully  aware  that  there  was  much  truth  in  this  sugges¬ 
tion,  they  were  powerless  to  effect  many  of  the  most  obvious  econom¬ 
ies  because  they  could  only  be  brought  about  by  co-operation  between 
the  railroads,  and  effective  agreements  in  respect  to  time  schedules, 
methods  of  operation,  and  the  like,  for  such  co-operation  and  agree¬ 
ments,  although  reasonable,  probably  would  be  held  by  the  courts  to 
be  contrary  to  the  Sherman  anti-trust  law.  Railway  men  were  aware 
also  that  they  could  make  additional  economies  by  the  more  general 


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introduction  of  piece  work,  bonus  or  other  methods  to  increase  the 
efficiency  of  labor,  but  they  were  more  keenly  aware  than  the  general 
public  that  such  changes  would  be  met  with  opposition  and  probably 
strikes  by  organized  labor;  and,  as  has  been  frequently  pointed  out  by 
others,  while  the  law  imposes  on  railway  managements  the  duty  of 
maintaining  continuous  transportation  service,  it  does  not  afford  to 
the  railways  adequate  protection  against  unreasonable  strikes  which 
would  interrupt  the  service. 

The  plea  of  the  railroad  man  to-day  is  that  either  he  be  let  alone 
to  work  out  his  own  salvation  under  the  competitive  system,  or  that 
the  country  shall  acknowledge  that  the  competitive  system  is  so  ob¬ 
jectionable  in  some  of  its  results  that  we  must  rely  solely  on  federal 
and  state  authorities  to  pass  upon  or  fix  rates.  Someone  will  say 
this  is  a  plea  for  “pooling,”  and  the  evils  of  the  old  “pool”  days  will  be 
recalled ;  but  that  is  not  the  contention.  The  claim  is  that  if  we  must 
submit  to  the  regulation  of  rates,  then  we  should  be  free  to  make  bind¬ 
ing  agreements  between  ourselves  in  respect  to  rates,  time  schedules, 
terminal  allowances  and  multitudinous  matters  in  connection  with 
our  public  duties,  subject  always  to  full  and  complete  publicity  and 
the  approval  of  the  state  and  national  authorities.* 

The  hostile  public  opinion  to  which  I  have  already  referred  has 
borne  down  upon  the  railroads  in  numerous  exactions  of  law,  some¬ 
times  veiled  under  the  guise  of  the  necessities  of  public  safety,  but 
more  often  nothing  more  nor  less  than  in  the  spirit  of  retaliation 
against  the  railroads.  Unfortunately,  too,  during  the  latter  portion 
of  the  period  of  which  I  am  speaking,  much  of  this  legislation  has  been 
fathered  by  labor  organizations  among  our  own  employes  who,  in¬ 
stead  of  being  loyal  to  their  employers,  are  actually  “lobbying”  against 
us.  I  am  not  saying  this  in  unfriendliness  to  labor  men,  but  be¬ 
cause  I  feel  that  I  must  in  this  discussion  talk  plainly  and  not  mince 
matters. 

I  shall  attempt  a  brief  review  of  some  of  this  legislation  that  you 
may  have  the  matter  clearly  before  you : 

1.  Legislation  for  the  Two-Cent  Fare  Law.  This  swept  over 
the  country,  especially  in  the  middle  West,  some  six  or  eight  years 
ago.  The  theory  of  the  legislation  was  that  the  giving  of  free  trans¬ 
portation  by  railroads  had  been  altogether  too  general,  and  that  the 


*When  railway  men  complain  of  rates,  it  is  commonly  said  that  it  is 
folly  of  them  to  complain,  because  they  established  the  very  basis  of  rates 
complained  of.  That  is  true.  The  competitive  system  which  brought  many 
railway  corporations  to  bankruptcy  and  created  many  unjust  discriminations 
did  slaughter  rates  to  a  minimum.  Now,  by  the  operation  of  law,  these  rates 
have  been  made  unadjustable,  except  downwards.  They  have  been  frozen. 


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granting  of  a  two-cent  fare  on  mileage  books  helped  the  traveling 
man  who  was  paid  by  wealthy  corporations,  whereas  the  poor'  man 
and  the  farmer  had  to  pay  full  local  rates.  The  net  effect  of  this  legis¬ 
lation  has  been  a  severe  impairment  of  railway  passenger  earnings, 
and  yet  communities  cannot  see  that  with  two  cents  as  a  maximum 
the  railroads  are  not  as  free  as  formerly  to  give  reductions  in  rates  for 
special  occasions,  such  as  county  fairs,  excursions  to  cities,  etc. 

2.  Postal  Legislation.  Great  reductions  in  the  compensation  by 
the  government  to  the  railroads  for  carrying  the  mails  have  been 
made,  until  this  service  on  many  railways  is  done  at  an  actual  loss  and 
at  the  expense  of  other  business.  One  of  the  most  glaring  injustices 
under  the  postal  law  and  the  executive  orders  of  the  Postmaster- 
General  and  his  assistants  arises  from  the  fact  that  the  railroads  carry 
the  mails  for  four  years  on  the  basis  of  weight  at  the  beginning  of  this 
four-year  period,  and  as  an  example  of  what  injustice  can  be  done 
under  the  guise  of  governmental  regulation,  I  might  refer  to  what 
actually  happened  in  the  central  West  last  summer.  About  three 
months  prior  to  the  quadrennial  mail-weighing,  the  Postmaster-Gen¬ 
eral  diverted  a  large  part  of  the  magazine  mail  to  be  carried  by  freight, 
so  that  when  the  weighing  was  accomplished  the  railroads  received  no 
increment  on  account  of  the  weight  of  magazines,  although  the  busi¬ 
ness  had  been  built  up  largely  in  the  preceding  three  and  one-half 
years.  Three  months  later  the  government  parcels  post  made  a  large 
addition  to  the  weight  of  mails  carried,  but  still  no  allowance  has  been 
given  to  the  railroads  for  this.  Thus,  at  the  present  moment,  while 
the  government  is  gaining  favor  in  the  public  eye  by  the  carriage  of 
parcels  post  matter,  the  chief  work  in  connection  with  that  carriage — • 
the  work  of  transportation — is  being  done  free  of  any  expense  to  the 
government ;  that  is,  it  is  being  done  on  the  basis  of  weights  taken  be¬ 
fore  the  parcels  post  was  inaugurated. 

3.  The  Hours  of  Service  and  Safety  Appliance  Laws,  although 
adding  to  the  burdens  borne  by  the  railways,  were  so  obviously  regu¬ 
lations  intended  to  promote  safety  and  better  working  conditions  that 
1  mention  them  not  in  complaint,  but  only  as  a  matter  of  record. 

4.  The  Boiler-Inspection  Law.  The  ostensible  object  of  this  law 
was  to  promote  the  safety  of  engineers  and  firemen,  but  its  effect  has 
been  very  much  more  far-reaching.  It  is  so  drastic  that  to  comply 
with  its  provisions  is  practically  impossible.  It  would  require  every 
locomotive  in  the  country  to  be  in  practically  perfect  condition,  and 
in  practice  is  operative  solely  at  the  discretion  of  a  large  number  of 
minor  government  officials.  During  the  winter  of  1912  an  important 
trunk  line  in  this  country  was  almost  put  out  of  business  by  reason 
of  an  inspector  coming  down  upon  it  and  condemning  every  locomo- 


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tive  in  the  round  house.  The  fact  that  the  inspectors  ordinarily  use 
discretion  and  common  sense  in  administering  the  law,  that  they  do 
not  always  enforce  its  provisions  to  the  letter,  is  the  only  reason  that 
it  is  operative  at  all;  but  that  is  poor  satisfaction  to  the  railroad 
official. 

5.  Electric  Headlight  Laws.  In  a  number  of  states  electric  head¬ 
light  laws  have  been  enacted,  ostensibly  for  the  protection  of  the 
locomotive  engineer  and  the  traveling  public,  but  there  is  reason  to 
believe  that  it  is  really  for  the  promotion  and  benefit  of  an  electric 
headlight  corporation,  in  the  official  ranks  of  which  members  of  the 
Brotherhood  of  Locomotive  Engineers  are  prominent.  A  responsible 
organization  and  one  justly  proud  of  its  long  reputation  for  honorable 
dealing  and  conservatism  cannot  safely  lend  itself  to  this  sort  of 
chicanery.  These  state  laws  in  many  cases  do  not  simply  require  a 
headlight  of  adequate  candle  power,  but  by  specifying  an  electric 
light  or  one  of  very  high  candle  power,  they  exclude  equally 
effective  acetylene  headlights,  although  it  is  a  notorious  fact  that 
these  have  proved  simple  and  satisfactory  in  service  on  automobiles 
all  over  the  country. 

6.  The  So-Called  “Full-Crew”  Laws.  I  need  hardly  tell  a  New 
York  audience  about  these  laws.  They  are  among  the  most  unjust 
exactions  which  railroads  have  ever  had  to  face.  Several  years  ago  the 
federal  government  required  the  railroads  to  equip  all  their  freight 
cars,  as  well  as  passenger  cars  and  locomotives,  with  air  brakes,  and 
stipulated  that  the  speed  of  trains  should  be  entirely  controlled  by  the 
locomotive  engineer.  Now  comes  an  organization  of  trainmen, 
boasting  a  membership  of  two  hundred  thousand,  and  by  reason 
of  an  offensive  and  defensive  alliance  with  the  other  railroad  organiza¬ 
tions,  having  the  tacit  support  of  all,  and  by  means  of  its  lobbies  and 
pre-election  pledges,  is  trying  to  compel  the  railways  to  employ  un¬ 
necessary  men.  So  far  from  being  in  the  interest  of  public  safety  such 
legislation  is  the  reverse,  for  the  reason  that  traveling  on  a  freight 
train  is  obviously  hazardous,  and  placing  an  additional  man 
where  he  can  do  no  good  and  is  only  risking  his  own  neck, 
puts  an  additional  risk  and  burden  upon  the  railroad,  over  and  above 
the  wages  paid.  Besides,  by  increasing  operating  expenses,  it  tends  to 
reduce  net  earnings,  and  whatever  reduces  net  earnings  impairs  the 
power  of  the  railways  to  raise  capital  that  should  be  invested  in  addi¬ 
tional  tracks,  block  signals  and  other  improvements  that  do  tend  to 
increase  safety.  The  object  of  this  trainmen’s  organization  in  this  in¬ 
stance  is  purely  selfish.  Its  members  realize  as  well  as  every  em¬ 
ployer  or  economist  that  wages  are  controlled  in  the  long  run  by  de¬ 
mand  and  supply ;  that  by  compelling  the  railroads  to  employ  this  ad- 


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ditional  brakeman  on  every  train,  they  will  increase  the  demand  and 
help  to  exhaust  the  supply ;  thus  influence  wages. 

After  such  an  array  of  remedial  (sic)  legislation,  and  this  is  only 
a  partial  list,  no  wonder  that  President  Hadley  of  Yale,  one  of  the 
wisest  contributors  to  the  sum  of  human  knowledge  upon  this  sub¬ 
ject,  was  moved  to  exclaim  in  an  address  at  New  Haven  last  January: 

“I  am  afraid  that  neither  the  public  nor  the  government  is  awake 
to  the  real  state  of  things.  In  our  endeavors  to  control  corporations, 
we  too  often  try  to  lessen  their  efficiency  instead  of  increasing  it.” 

The  results  of  these  changes  in  policy  and  the  enforced  readjust¬ 
ments  are  beginning  to  be  apparent.  They  should  have  your  consider¬ 
ation,  for  they  are  of  immense  importance. 

First  of  all,  it  is  very  clear  that  the  period  of  railroad  building  and 
extensions  is  over.  A  great  deal  of  capital  is  needed  and  will  be  used 
in  completing  and  improving  existing  railroads  and  in  adding  to  their 
equipment  and  facilities ;  but  the  period  of  building  extensions  into  new 
territory  is  over,  because  there  is  no  encouragement  to  the  investor. 
There  is  a  vast  territory  west  of  the  Mississippi  and  Missouri  rivers 
which  needs  development,  but  however  this  may  be,  it  can  be  put 
down  as  a  safe  prognostication  that  if  the  present  policy  of  regula¬ 
tion  continues,  this  territory  must  rely  for  development  solely  on 
the  extension  of  branches  and  feeders  from  existing  railways,  and 
they  will  make  additions  to  their  mileage  only  in  proportion  to  the 
encouragement  afforded  by  the  earnings  of  existing  lines. 

Second,  the  railroads’  cost  of  living  has  gone  up  enormously  in 
the  last  twenty  years.  Staple  necessities,  such  as  fuel  and  ties,  have 
increased  very  largely  in  cost,  and  at  the  same  time  the  standards  of 
service  which  the  public  demands  have  greatly  risen.  In  order  to 
increase  their  efficiency,  railroads  have  been  compelled  to  use  larger 
locomotives,  increase  their  tons  per  train ;  this  in  turn  has  created  a 
demand  for  larger  and  stronger  cars,  heavier  rail,  better  roadbed,  and 
so  on. 

Another  important  point  is  that  in  recent  years  the  general  rate 
of  interest  has  risen.  It  has  risen  against  the  railways  as  well  as 
against  other  borrowers,  and,  therefore,  to  raise  adequate  capital  the 
railways  must  pay,  and  must,  therefore,  earn,  a  larger  return  on  capi¬ 
tal  than  formerly  was  necessary.  Railways  which  a  few  years  ago 
could  sell  3 y2  per  cent  bonds  at  par  cannot  now  sell  A]/2  per  cent  bonds 
at  par.  The  net  earnings  of  the  railways  have  not  increased  in  pro¬ 
portion  to  the  increase  in  the  amount  that  they  must  pay  to  get  new 
capital  or  to  refund  old  securities. 

Third.  Every  new  public  demand  of  the  federal  or  state  gov¬ 
ernment  or  the  municipality  puts  a  burden  which  is  especially  heavy 


10 


to  bear  on  the  railway  company  with  small  resources.  It  is  perfectly 
clear  to  railroad  men  that  the  day  of  the  small  railroad  has  absolutely 
gone.  A  railroad  of  less  than  500  miles  which  is  not  an  adjunct  to  an 
important  mining  or  manufacturing  concern  has  little  show  for  ex¬ 
istence.  Although  public  opinion  more  or  less  resents  the  great  rail¬ 
road  corporation  and  the  excessive  centralization  of  authority  incident 
to  these  large  corporations,  yet  it  is  perfectly  clear  that  the  many  ex¬ 
actions  of  law  to  which  I  have  briefly  referred  have  had  much  to  do 
with  bringing  them  into  being.  In  the  battle  for  existence  only  the 
strongest  have  been  able  to  survive. 

Fourth.  It  has  been  sometimes  pointed  out  that  poverty  and 
wealth  are  largely  comparative  terms ;  and  certainly  this  applies  to 
railway  corporations  just  as  much  as  to  individuals.  The  plea  of  the 
relatively  poor  corporation  for  an  advance  in  rates  is  unheeded.  Our 
Commissions  think  only  of  the  profits  which  our  richest  corpora¬ 
tions  will  make  by  reason  of  a  possible  advance.  The  fact  that  the 
richest  corporations  represent  relatively  small  proportion  of  the  total 
mileage;  that  they  are  rich  by  reason  of  fortunate  chance  or  extra¬ 
ordinary  foresight ;  that  many  of  them  are  corporations  which  went 
through  a  long  struggle  in  their  early  history  and  only  after  bank¬ 
ruptcy  were  put  upon  a  paying  basis,  is  forgotten.  The  very  com¬ 
plexity  of  all  these  questions  points  clearly  to  the  principle  that  the 
public  should  more  and  more  depend  on  expert  knowledge  in  the  regu¬ 
lation  of  the  railways,  and  not  attempt  this  regulation  by  annual 
legislative  enactments. 

Fifth.  The  greatest  hope  of  the  railways  and  the  public  in  the 
future  lies  in  intelligent  regulation.  Railway  officers  whom  I  meet 
and  talk  with  do  not  in  the  least  fear  the  results  of  regulation  by 
Commissions  free  from  political  pressure,  with  a  fair  knowledge  of  the 
facts.  Our  experience  is  that  these  Commissions,  as  they  come  to 
know  the  problem  better,  are  more  and  more  willing  to  understand 
the  railroad  man’s  point  of  view,  and,  as  we  think,  deal  fairly  with  us. 
One  of  the  great  troubles  is  that  while  the  public  and  the  legislatures 
have  created  these  commissions  on  the  theory  that  they  will  be  most 
competent  to  solve  the  problems  of  public  regulation,  the  public  and 
legislatures  will  not  refrain  from  interfering  with  the  work  of  the 
commissions.  In  many  states  the  legislatures  or  the  people  by  refer- 
endums  have  adopted  laws  to  reduce  rates  or  impose  unreasonable  re¬ 
strictions  or  burdens  on  the  railways  when  the  legislation  was  openly 
opposed  as  unreasonable,  unjust  and  harmful  by  the  commissions. 
The  public  shows  too  much  of  a  disposition  to  disregard  injunctions 
of  experts  to  be  fair  and  moderate,  even  when  they  proceed  from  its 
own  experts,  and  to  trust  and  follow  only  those  public  men  who  advo- 


11 


cate  radical  and  even  violent  measures.  We  are  not  blind  to  the  dan¬ 
ger  which  lies  in  the  public  clamor  for  better  service  and  more  exact¬ 
ing  requirements.  It  sometimes  seems  as  if  every  man’s  hand  were 
against  us,  and  as  if  few  men  in  public  life  could  be  found  to  posesss 
the  requisite  courage  to  withstand  the  pressure ;  but  my  opinion  is 
that  while  the  public  is  slow  in  making  up  its  mind,  it  finally  comes  to 
a  right  conclusion  and  the  reaction  is  all  the  more  effective  when  it 
does  come.  The  time  is  sure  to  arrive  when  the  public  will  see  that 
if  there  isn’t  a  fair  profit  in  railway  operation  the  development  is 
bound  to  cease,  because  capital  will  seek  other  and  more  gainful 
%  occupations. 

In  Conclusion. 

Some  wag  has  said  that  an  optimist  is  a  man  who  will  take  the 
V  lemons  that  are  handed  to  him  and  make  lemonade  of  them ;  and  cer¬ 
tainly  every  railroad  man  is  an  optimist.  He  cannot  afford  to  be  any¬ 
thing  else.  He  could  not  survive  if  he  were  anything  else.  I  should, 
therefore,  admit  that  I  was  not  true  to  the  type  if  I  did  not  sincerely 
believe  that  these  problems  would  all  be  worked  out  satisfactorily  as 
time  goes  on.  It  is  for  the  railroad  man  to  state  his  case  frankly 
and  squarely,  and  it  is  for  you  gentlemen  and  for  the  community  at 
large  to  decide  whether  the  railways  have  been  fairly  dealt  with  or 
not.  Just  as  medical  science  has  discovered  that  it  is  the  tendency  for 
every  malady  to  create  its  own  destructive  agent,  so  it  appears  to  me 
the  history  of  the  world  shows  that  the  same  is  true  of  every  eco¬ 
nomic  disease.  We  have  gone  far  from  the  doctrine  of  laissez  faire, 
but  it  is  clear  to  every  thinking  man  that  there  was  a  fundamental 
truth  in  that  philosophy.  We  live  in  an  impatient  era;  every  evil  is 
described  in  exaggerated  terms,  and  while  part  of  the  community  be¬ 
come,  through  this  very  exaggeration,  callous  to  real  troubles,  the 
better  and  more  sensitive  portion  is  impatient  that  the  progress  is  not 
more  rapid. 

Just  so  soon  as  the  public  become  convinced  that  the  railways  are 
not  fairly  treated,  that  their  treatment  is  reacting  upon  them  in  the 
shape  of  diminished  ability  to  furnish  adequate  facilities,  safety  ap¬ 
pliances,  and  the  like,  just  so  soon  there  will  be  a  check  on  unreason¬ 
able  exactions  and  unfair  restrictions.  Government  ownership  of  raib 
roads  is  a  bugaboo  which,  though  often  referred  to,  the  public  does 
not  demand.  If  government  ownership  of  railways  comes,  it  will  come 
because  the  owners  of  railways  prefer  it  to  government  regulation, 
and  it  will  be  a  sorry  day  for  the  republic  when  regulation  is  car¬ 
ried  to  such  an  extreme  that  the  owners  of  the  railways  are  unwilling 
to  accept  any  longer  the  responsibilities  of  management. 


